web analytics
Your Independent Alternative!

Sales Tax Holiday Begins Friday

Florida shoppers won’t pay sales tax on many items from Friday through the weekend thanks to a Legislature hoping to spur the economy, give weary consumers a break and maybe land a few votes.

The three-day event is expected to save taxpayers $26 million by exempting qualified items from the state’s 6 percent sales tax on a host of items from pencil and paper to backpacks and shoes, although history suggests many of them will end up spending more on taxes on other items than they otherwise would have.

The holiday will translate into a loss of $21.2 million in state sales tax revenue and $4.8 million for local governments, according to House estimates released earlier this year.

The sometimes annual event, versions of which are now in place in 19 states, remains popular despite criticism by some tax watch groups that say the events are more politically savvy than economically sound.

But Gov. Charlie Crist on said even a little bit of extra shopping may help the retail sector, as well as strapped parents with kids going back to school.

“I am pleased that students and families will have the opportunity to save their hard-earned money as the new school year approaches,” Crist said in a statement following an appearance at the Dadeland Mall in Miami to tout the holiday. “It is always a priority to ensure our children have the resources they need to be successful and competitive in the classroom.”

Cash strapped lawmakers earlier this year approved the sales tax holiday, a three-day event beginning at 12:01 a.m. Friday. Consumers will not pay sales tax on books, clothing and footwear that cost $50 or less and school supplies that cost $10 or less.

The Legislature first enacted a back-to-school sales tax holiday in 1998 and has since had eight such periods ranging from a week to 10 days. Cash strapped lawmakers didn’t set aside money for the holiday for the past two years during the economic downturn that caused a budget crisis at the Capitol. During more flush times, the state has also offered sales tax breaks on hurricane supplies, which lawmakers didn’t give out this year.

Mark Robyn, an economist with the Tax Foundation, a Washington, D.C.-based non-profit research group that advocates for transparency and broad based rates for state and federal taxes, says the holidays merely shift the time in which consumers choose to purchase back-to-school items and therefore don’t result in either increased revenue for businesses or significant savings for consumers.

“There are better ways to use tax incentives,” Robyn said. “(The holidays) are more a political gimmick.”

Small businesses can actually be hurt by the holiday as it can slow sales before and after the event, a shift that effects cash flow, Robyn said. Small retailers are also less able to have enough staff needed to handle the increased demand.

Retailers say such opposition is ill-founded because the sales tax holiday translates into increased revenue not only for retailers who offer back-to-school items but to other merchants who sell taxable items as well during the period.

Rick McAllister, president of the Florida Retail Federation, said tax analysts who say the holiday has little or no impact on sales should talk to the retailers who annually lobby lawmakers to offer it.

“The people who know are the retailers, McAllister said. “If it didn’t make a difference why would they want to do it? It’s more work for them. If it didn’t translate into higher sales they wouldn’t want to go to the trouble.”

Retailers in the past have said that because of increased sales of other items, the sales tax “holiday” actually ends up increasing the amount of tax revenue coming into state coffers during the period.

Comments are closed.